Northeastern states of India have benefitted from the implementation of Goods and Services Tax (GST) by way of a big jump in their revenue collections after the tax reform in 2017, said Union Finance Minister Nirmala Sitharaman at an event in New Delhi on September 23.
The states in the region have benefitted from the emphasis given by the government on infrastructure creation and connectivity improvement. The region has also benefited from the higher tax transfers to the states and by way of funds given to them for asset creation, the union finance minister added.
GST is a destination-based tax on consumption. The importing states get the tax on inter-state trade, unlike seen in the pre-GST regime. This is a big advantage under GST for states with little manufacturing base as they receive proceeds of Integrated GST (IGST) receipts on imports.
Although areas like the northeast have lesser manufacturing activities, both the collection of GST and the devolution of tax from the central government result in good revenue generation. The states recorded a compound annual GST revenue growth rate of 27.5% since the implementation of the GST (2017-18 to 2022-23) as against 14.8% for all states.